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Fuel oil trend

Rotterdam: $ 3 lower.
Singapore: $ 8 lower.
US Gulf: $ 1 higher.

OPEC output rises slightly off multi-year lows (Brent: $106.5)

The aggregated January production from OPEC came out just shy of their official target of 30 mbpd. The increase with 300,000 bpd from December's average was mainly due to Libya partly reestablishing production (though still far and away from the 1.6mbpd pre-war production).

Iraq's oil production is bit of a conundrum for January. Figures vary from approximately 2.5mbpd (due to a higher number of shipments from southern ports) to 2.3mbpd (due to attacks on the pipeline transporting crude into Turkey). The truth probably lies somewhere in the middle, but if the range widens much further between alleged production figures, it would likely increase volatility for oil prices.

Asia is still enjoying the Lunar New Year, and besides ISM Manufacturing (the “temperature” on the U.S. manufacturing sector), not much is scheduled for today. This week's most important scheduled events are the ECB press conference on Thursday and the unemployment figures from the U.S. on Friday.

Recommendation

We advise consumers to use dips and setbacks to establish partly hedges should it suit your hedging strategy. We estimate potential short term setbacks to be around 1% for crude and gasoil, the upside however looks to have more potential in the medium term. With the low inventories for distillates, gasoil/diesel and consumers of lighter products should be extra cautious as sudden spikes cannot be ruled out.